Since its conception, Binary Option has gone several modifications and continually changing on its way to perfection. Hence, if you wish to become a better trader, make sure you get the latest developments and trends in the business.
Binary Option has not been popularized until the last quarter of 2008. It was in this year when Wallstreet was in the mix-up mystification and that the world was threatened by the financial crisis.
This was the time several financial institutions closed down such as the Lehman Brothers. This was the circumstances that brought Binary Options, you can try some in Top 7 Binary Robots ,into the world of business as there had been a desperate need for investments with a lower risk profile to be used for the traders.
So what are the advantages of Binary Options Trading? First, it does not require really require trading experience, however it is much better for newbies to get a good grip on what the business really is before investing.
However, it is not a complex as forex trading. Second, unlike forex, the trader already knows how much he or she will be receiving and it offers a high return on investment.
Third, it offers fast and easy approach as the trader uses the mobile application on many platforms. Lastly, it is the only financial tool that provides traders with a variety of assets to trade.
Just like any other investment, one must have a plan in mind on how to make the most of his or her investments. Unnecessary mistakes might cost a fortune. For starters, the trader must be knowledgeable of the two rules: 5/15 rule and the 10/30.
- 5/15 rule – The trader must keep in might to set a maximum loss margin that can handle without sacrificing his or her profit potential.
The 5/15 rule is used as a risk management tool in when investing with low risk. It means the percentage executed in a single trade in parallel to the percentage of the whole capital.
For example: If the total investment amounts to $1000, then the only allowable risk is 5% in a single transaction and %150 of the entire capital.
- 10/30 rule – if a trader wishes to earn more than the amount he or she used to get, then this rule might come handy, especially for aggressive individuals.
The rule simply means the trader is only allowed to invest 10% in a single trade and 30% during the trading sessions. For example: of the total capital $1000 the only allowable risk is $100 in a single transaction and $300 from his entire capital.
It is encouraged to have proper capital management. Such as recording all the trades and trend for a better understanding of asset movement and eventually provide better trade strategies in the future.
One efficient way of doing this is using a trading robot. What it does is that it trades for the trader automatically.
This is useful for newbies and busy people, but wants to make money. Finally, for those who worry so much of their investment, it is always encouraged to conceptualize exit plans or safety nets in case of consecutive losses.